Rates rise for the right reasons

A seemingly steep rates increase for the first three years of the Long Term Plan (LTP) proposed by Hurunui District Council will be the fastest way to pay off debt in the long run.

The LTP allows Hurunui District Council every three years to review the 10-year plan, where it outlines its priorities, projects and sets proposals for how to fund it.

The Council has determined that the roading debt (which has been built up to offset rates in the past) needs to be repaid by the end of 2024, which is year three of the LTP.

It is proposing an increase of 8.49% for year one, with a 4.99% increase for each of years two and three.

The LTP proposal, which includes this rates rise, will go out for public consultation soon.

Jason Beck, Chief Financial Officer, says after assessing feedback from the consultation, the proposed increases may change accordingly.

He said the increase for Year One (2021/2022) is broken down into two parts; half of the increase relates to actions the Council took to reduce the rates increase for the current 2020/2021 year which was designed to curb the potential effects of COVID-19, in particular the financial performance of the thermal pools.

He said curbing the rates was achieved by various means, such as the use of debt to fund roading expenditure and the use of accumulated reserves to offset district-wide rates.

“In addition, the Council reduced its expenditure on various grants and awards for the year 2020/2021.”

The second part of the rates rise relates to increases in cost forecast for the 2021/2022 year; the local share of roading costs have increased by $293,000; a result of the bid to New Zealand Transport Authority for funding. In addition, there has been a $180,000 increase in the governance rate to fund a position to service the joint Water and Land Committee, and to provide $200,000 towards initiatives relating to the Council strategy.

Part of the increase for the 2021/2022 year relates to water, where it is proposed that there will be a 5.29% increase in water rates. This allows the Council to continue the staging process that it implements in 2015, to ensure all rural water supplies are paying the same water rate by 2025.

A 5.29% increase in water rates will account for the staged increase to bring the rural water supplies up to a harmonised water rate by 2025.

“Given the fact that we made allowances for the last 12 months and reduced rates whilst there was a level of uncertainty created by COVID-19, the reinstatement of those costs and funding results in an increase in the short term future, before accounting for any further costs increases required the 2021/2022 year.”

Wiping roading debt early means Council will have more room to move in the future. It will provide options for potential increases in roading costs from 2024 onwards such as further roading improvements and increased levels of service.

“Getting rid of debt as soon as possible gives us room to deal with potential reduced subsidies, or increased costs.”